The Public Accounts Committee has urged the Bank of England to redouble efforts into locating £50 billion of missing UK currency, an issue highlighted by the National Audit Office (NAO) earlier this year. The figure represents three-quarters of all UK banknotes currently in existence.
The primary reason for concern about the missing currency is that it is not being used in transactions or held as savings. This means that it is likely either overseas, tucked away in homes lying unreported, or being used in illegal transactions.
Meg Hiller, committee chair, said that the money "is stashed somewhere, but the Bank of England doesn't know where, who by or what for - and doesn't seem very curious. It needs to be more concerned about where the missing £50 billion is. Depending on where it is and what it's being used for, that amount of money could have material implications for public policy and the public purse. The Bank needs to get a better handle on the national currency it controls."
A report by the committee highlighted that the Bank of England had not provided any justification for the increasing demand for banknotes and currency. In the past months, demand for banknotes has steadily increased, despite cash declining in overall popularity as a preferred means of payment.
Additionally, the committee remains doubtful that the average individual with cash would keep it stashed and not use or invest it. They remain suspicious that the banknotes are being hidden for less innocent reasons.
A significant consideration here is that people located in remote rural locations have been struggling over recent months with access to cash. With an increasing number of ATM closures and shops refusing to accept cash payments, this problem is likely to be further exacerbated if the missing currency is not located and brought back into circulation.
As of now, The Bank estimates that around 20 - 24% of issued banknotes are in use. It also holds around £30.4 billion of contingency stocks of cash. Some have questioned the need for holding such high levels of stock, since the minimum guidance level is around £15.6 billion.
The Bank's stance on the missing currency is that the public has the right to hold cash if they wish, so it is not as critical an issue as it appears. A spokesman from the Bank said, "It is the responsibility of the Bank of England to meet public demand for banknotes. The Bank has always met that demand and will continue to do so. Members of the public do not have to explain to the Bank why they wish to hold banknotes. This means that banknotes are not missing."
The UK's missing currency problem is indeed not as critical as in other currencies. For example, in the case of the dollar, only around 15% of the currency can be accounted for, a significantly lower proportion than in the UK.
However, the gaps in oversight of the cash system can, if left unchecked, cause considerable problems in ensuring that people and businesses across the UK continue to have access to cash.